The Future of Facebook

Facebook’s stock took a virtual beating in the weeks
after the company’s historic IPO in May — obviously a
surprise to many aggressive investors on Wall Street,
but not so much to those more closely linked to the
evolution of the Web.

On the surface, more than 900 million active users is
an astonishing vote of confidence for the social network’s
global popularity — and no one is denying
that. One or two layers beneath the surface, however,
is the long-term viability of Facebook’s advertising
business, which has been at the center of the controversy
surrounding its “failed” IPO and which remains
to be accurately evaluated — leading to numerous
lawsuits and countless livid investors.

But most important to this discussion — and to
Web businesses everywhere — is the overall future
of Facebook and, especially important, why it may
not have the one we once envisioned.

It’s a clichéd term, but Facebook has led the
charge of the Web 2.0 movement, which has been a
critical development in the evolution of the Internet
and for all online businesses. The question is, will
Facebook successfully make the transition into the
next phase of the Web’s evolution — and many believe
that answer is no.

Most Web historians break down the Internet’s
evolution into three phases. The first phase was the
period from the mid-1990s to the early 2000s that
was defined by products such as Netscape and Internet
Explorer, portals such as Yahoo and AOL, and
other companies such as Amazon, eBay and Google.
The second phase, call it Web 2.0 or the move into
social media, began around 2002 and was made possible
by companies such as MySpace, Facebook,
LinkedIn, Digg, Reddit, StumbleUpon, Groupon, etc.

Some businesses have transitioned from phase
one into phase two much more successfully than others
have, and some will have a far more difficult time
transitioning into phase three — the mobile phase
that we are entering right now — than others will. I
believe that Facebook’s failure thus far to effectively
monetize the mobile platform puts the company’s future
at risk, and I’m not alone.

“In five to eight years, Facebook is going to disappear
in the way that Yahoo has disappeared,” Eric
Jackson, founder of Ironfire Capital, recently told
CNBC. “Yahoo is still making money, it’s still profitable,
still has 13,000 employees working for it, but
it’s 10 percent of the value that it was at the height of
2000. For all intents and purposes, it’s disappeared.”

It’s unlikely that 1 billion users are going to vanish
from Facebook in the next few years, turning the
world’s most popular social network into a ghost
town. But rather than its present reputation as a visionary
company that changed the way we communicate
— which is what the original mission was —
what is now at stake is Facebook’s potential reputation
as one of the most relevant, influential companies
in the history of the world — which is what that
mission has since become.

Until it can overcome the challenges it is currently
experiencing with mobile monetization, there is as
much of a chance that the Facebook legacy will more
closely resemble Yahoo’s as either Google’s or Apple’s.

While on a much smaller scale, of course, the
same applies to our own Web businesses. To be successful
over the long term, we have to remain flexible
and open-minded. We have to not only accept change
but embrace it and position our companies on the
crest of the next wave rather than resist it and become
crushed by its force.

Right now that wave is the dawn of a new mobile
era, and it is vital that we find the optimal positions
for our online businesses before it’s already upon us.
We will help you discover the different ways to do
that in next month’s feature article, but in the end
there are really only two options to consider — adapt
or become irrelevant.